Barista FIRE

Do you remember that cool substitute teacher at your high school who drove a convertible and seemed to have a carefree life?  He was usually the first one out the door at 3:15pm and seemed to show up whenever he wanted.  This is the first incarnation of Barista FIRE.

This is someone who has saved up enough money that they don’t need to save any more for retirement and are just supplementing their retirement withdrawals.  Instead of living solely on the 4% Rule, they’ve decided to work part time which helps pad their savings and gives them an added bonus of having something to do.

BaristaFIRE is a new concept that has been gaining popularity among millennials who want to achieve financial independence but do not want to give up working entirely. In this article, we will explain what it is, how it works, and why it might be a good fit for you.

 

What is Barista FIRE?

This is when someone has reached Financial Independence Retire Early (sort of) but continues to work part-time.

Some popular jobs are baristas(hence the name), sandwich “artists”, bar tenders, substitute teachers, hardware store employees, etc.

The idea is to achieve financial independence by saving and investing enough money so that you can work part-time as a barista or in any other low-stress job that you enjoy.

 

Barista FIRE vs Traditional FIRE

In traditional FIRE, the goal is to save up enough so that you can retire early and never work again.

With BaristaFIRE, the goal is to work part-time to cover your living expenses while also enjoying the freedom and flexibility to pursue your passions.

 

BaristaFIRE Example

Meet Kristen.  She is 40 years old, has a 3 year old son and has just left her high paying but high stress job in HR.  She has managed to save up $600,000 and while she doesn’t quite have enough for FIRE, she wants to be in a position where she can spend more time with her son and still make a little extra money.  She decides to take 4% of her retirement fund of $600,000 which gives her $24,000 a year and work part time as an Social Media Manager making another $24,000 a year.  Now she has $48,000 coming in every year while working part-time.

 

How Does it Work?

The first step is to save and invest enough money so that you can cover your living expenses with part-time work. This typically means saving 25-30 times your annual living expenses, which is the same amount needed for traditional FIRE.

Once you have saved enough money, you can start working part-time at a restaurant, coffee shop, editor or in any other low-stress job that you enjoy. The idea is to supplement your retirement withdrawals and work just enough to cover your living expenses to allow your investment portfolio to grow over time.

Benefits of Working After Retirement

Working part-time after you have left your main career has a lot of advantages:

Flexibility: Working part-time allows you to have more free time to pursue your passions, travel, or spend time with loved ones.

Social Interaction: Working in a customer-facing job can provide social interaction, which is important for mental health and well-being.

Feeling of Accomplishment:  Human beings are made to feel good when we accomplish something.  This is why so many retirees get the “retirement blues”.  They have worked their entire life and now that they’re retired, their bored out of their minds.

Working part-time can give you a sense of accomplishment while making some extra money at the same time.

Sense of Control:  If you are only relying on the stock market for your income then you essentially have no control over what’s going on.  There might be another pandemic, war, financial crisis or all three.  We have idea what’s going to happen and this creates uncertainty which can be stressful in a year when the stock market is down.

Additional Income: Working part-time can provide additional income that can be used to cover your living expenses or reinvested to grow your investment portfolio faster.

Health Insurance: Many part-time jobs offer health insurance benefits, which can be important for those who want to retire early and have access to affordable healthcare.

 

The Problems With Barista Fire

While pursuing “barista fire” may sound appealing, there are several potential problems to consider:

Limited income: Part-time jobs typically pay less than full-time jobs, so relying on a part-time job for income may limit your financial flexibility and reduce your ability to save and invest for the future.

Lack of career growth:

Working in a low-stress job may not provide opportunities for career advancement or professional development, which could limit your earning potential and make it harder to transition back to a full-time career if needed.

Social security and retirement benefits: Depending on the type of part-time work you do, you may not be eligible for certain benefits such as social security or employer-sponsored retirement plans.

 

Potential health care costs:

If you retire early and pursue part-time work, you may need to pay for your own health insurance, which can be expensive and eat into your retirement savings.

 

Inflation risk:

If you rely solely on savings and investment income to support your lifestyle, you may be vulnerable to inflation risk, which could erode the value of your savings over time.

It’s important to carefully consider these potential challenges and weigh them against the benefits of pursuing “barista fire.” While it may be a viable option for some, it’s not necessarily the right choice for everyone.

Pros and Cons of Barista FIRE

Pros

  • Flexibility: Working part-time allows you to have more free time to pursue your passions, travel, or spend time with loved ones.
  • Social Interaction: Working in a customer-facing job can provide social interaction, which is important for mental health and well-being.
  • Feeling of Accomplishment: Working part-time can give you a sense of accomplishment while making some extra money at the same time.
  • Sense of Control: Working part-time provides additional income that can be used to cover your living expenses or reinvested to grow your investment portfolio faster.
  • Health Insurance: Many part-time jobs offer health insurance benefits, which can be important for those who want to retire early and have access to affordable healthcare.

Cons

  • Limited income: Part-time jobs typically pay less than full-time jobs, so relying on a part-time job for income may limit your financial flexibility and reduce your ability to save and invest for the future.
  • Lack of career growth: Working in a low-stress job may not provide opportunities for career advancement or professional development, which could limit your earning potential and make it harder to transition back to a full-time career if needed.
  • Social security and retirement benefits: Depending on the type of part-time work you do, you may not be eligible for certain benefits such as social security or employer-sponsored retirement plans.
  • Potential health care costs: If you retire early and pursue part-time work, you may need to pay for your own health insurance, which can be expensive and eat into your retirement savings.
  • Inflation risk: If you rely solely on savings and investment income to support your lifestyle, you may be vulnerable to inflation risk, which could erode the value of your savings over time.

It’s important to carefully consider these potential challenges and weigh them against the benefits of pursuing “barista fire.”

 

So is Barista FIRE right for you?

There are a lot of different types of FIRE out there and Barista FIRE is a new concept that has been gaining popularity among millennials and Gen Zs who want to achieve financial independence but do not want to give up working entirely. By saving and investing enough money to cover your living expenses, you can work part-time or in any other low-stress job that you enjoy, while also pursuing your passions and enjoying the freedom and flexibility that financial independence provides.

Before pursuing Barista FIRE it’s important to take the risks into consideration.  By choosing to work part-time your future earning potential and career prospects might be affected and there are always unanticipated events that might come up which might require you to go back to work full-time.  

It’s also a good idea to not feel like picking a certain type of FIRE is like drawing a line in the sand.  The truth is, the lines between different FIRE types is blurry and while you might be satisfied doing BaristaFIRE for a few years, it’s possible that a life change will cause you to re-evaluate things and possibly go back to work full-time, save up for a few more years, and then fully retire.  The path is up to you so don’t feel boxed in by rigid definitions, the main point of all of this is to get more freedom and enjoyment out of life!  

 

FAQ

Coast FIRE vs Barista FIRE

These two types of FIRE are very similar but with one key difference.  Someone doing CoastFIRE is working part or full time and is making enough so that they never have to touch their retirement savings.

Barista FIRE on the other hand, is when you are working part-time AND withdrawing from your retirement savings.

 

How much do you need for Barista FIRE?

Your FIRE Number is really going to depend on your age, expenses and part-time earning potential.  But for someone in their 30s, $500,000 is generally seen as a good number to start with.  Then adding $100,000 for each decade, so $600,000 for someone in their 40s and so on.

 

What are some good Barista FIRE jobs?

The main point of finding a job once you’ve reached financial independence is to find something that you enjoy doing.

Here’s a list of some of the top jobs:

Barista (duh)

Bar Tender

Substitute Teacher

Teacher’s Assistant

Camp Counselor

Tutor

Freelancer

Uber Driver